Why is New Zealand a developed country

China and New Zealand agree free trade

pfi. Beijing, April 7th Chinese Prime Minister Wen Jiabao signed a free trade agreement with New Zealand Prime Minister Helen Clark on Monday in Beijing

pfi. Beijing, April 7th

Chinese Prime Minister Wen Jiabao signed a free trade agreement with New Zealand Prime Minister Helen Clark on Monday in Beijing, which provides for the abolition of all tariffs on Chinese exports to New Zealand and, however, only 97.2% of tariffs on imports of New Zealand goods. When the agreement comes into force - probably at the end of 2008 - 63.6% of Chinese exports and 24.3% of imports will be exempt from all tariffs.

Transitional periods for “sensitive” goods

Transitional periods have been agreed for the other goods. New Zealand wants to abolish the last tariffs in 2016, China in 2019. In New Zealand it is mainly the textile manufacturers who are to receive a longer grace period, in China the meat and dairy product manufacturers. According to the CEIC database, 27% of all New Zealand exports to China in 2007 were meat products and 3% were fruits and vegetables. New Zealand mainly imported machinery (16%), electrical appliances (16%) and textiles (9%) from China. The agreement also provides for the easier exchange of skilled workers, the simplified immigration of service providers and even the granting of longer tourist visas, but leaves states the right to restrict this again if they deem it necessary.

Switzerland is also interested

This is the first time that China has signed a free trade agreement with a developed country. The fact that the New Zealanders were the first to conclude negotiations with China has to do with the fact that Wellington was also the first developed country to grant China market economy status in 2004. The larger trading partners, including the USA and the EU, have so far refused this status with the undoubtedly justified reference that a large part of price formation in the Middle Kingdom is still administered or at least not determined by market mechanisms. However, China has made the qualification “market economy”, which makes it difficult to initiate anti-dumping proceedings, a prerequisite for talks on free trade talks. Switzerland is also interested in these. The Swiss Confederation therefore willingly complied with the Chinese demand last year.

The not only initial asymmetry in the concessions in the agreement with New Zealand shows once again how skilfully China is currently able to bring its actual and supposed attractiveness as a growing market into play in the representation of its own interests. Quite apart from that, it remains to be seen how much the agreement will actually facilitate New Zealand exports to China. After China joined the World Trade Organization (WTO), Chinese trade politicians have proven to be masters at replacing formal trade barriers with hidden, non-tariff barriers.

More than just prestige for New Zealand

calm Sydney, April 7th

The conclusion of a free trade agreement with China has high prestige value for New Zealand as the first industrial nation to achieve this. The pioneering role was highlighted with gusto in the media. New Zealand is likely to have accommodated the fact that, as a relatively low-weight economy for China, it is a “little fish” on which the emergency can be tested with larger partners (such as Australia, which is already negotiating with China). For New Zealand Prime Minister Helen Clark, whose Labor Government is somewhat uneasy about the approaching elections, the conclusion of the treaty is a success at the right moment, which will give her country a profile on the international stage.

New Zealand's economy will benefit to varying degrees until the various transition periods have expired, after which 96% of all New Zealand exports will be exempt from duties and taxes. For 35% of exports, tariffs will be eliminated as early as October, when the agreement comes into force. Not among these, however, are the areas of dairy products, lamb, wool and garden products (especially kiwi fruit), which are crucial for New Zealand's export economy, where transition periods run until 2013 and 2019 respectively. While Trade Minister Phil Goff emphasized that not all Chinese wishes for an opening of the New Zealand labor market had been given in, New Zealand will benefit from easier movement of people, especially in the areas of tourism and education. Chinese students make up a significant proportion of the overseas (and fee-paying) students in New Zealand.